Three of the teens, all of them either 18 or 19, have since been released "pending further enquiries," Australia's Federal Police said, but two remain in custody.
Sevdet Besim, 18, has been charged with conspiring to commit a terrorist act, and was denied bail Saturday.
The other suspect, a 19-year-old, has not yet appeared in court.
"Some evidence that we have collected at a couple of the scenes and some other information we have leads us to believe that this particular matter was ISIS-inspired," said Neil Gaughan, acting deputy commissioner of the Australian Federal Police.
The suspects planned to attack during a major national commemoration in a week, Prime Minister Tony Abbott said Saturday. "The act that we believe was in preparation involved attacks against police officers," he said.
There was also a risk to the public, police said.
Police said the suspects were targeting a ceremony on Anzac Day (Australia and New Zealand Army Corps Day
), which is April 25 and this year is the centennial of the Gallipoli Campaign in World War I.
Not representative of Islam
Abbott avoided the term ISIS -- or Islamic State -- to call out those who authorities believed influenced the suspects. He instead referred to the group as the "Daesh death cult," employing the acronym that is transliterated from the group's name in Arabic. It's a handle ISIS is known to loathe.
Police also distanced the suspects from any ethnic connection.
The men "are individuals acting by themselves. They are not representatives of any religious, cultural or national group," Victoria Police Acting Deputy Commissioner Shane Patton said.
"I think the entire Australian community should be concerned about the young age of those particular men," Gaughan said. "And this is an issue not just with law enforcement, but for the broader community. ... We need to get better in relation to identifying young men and woman involved in this type of behavior, at the very early stage."
Australia terror attacks
The suspects were associates of 18-year-old Nadun Haider, who was killed while stabbing officers at a police station in September, police said.
Abbott lamented a string of extremist attacks on Australian soil.
In December, Australian authorities stormed a Sydney chocolate cafe
where a self-styled Muslim cleric had been holding hostages, killing the gunman. Two of the 17 hostages initially held by the gunman died.
In February, two men were charged with plotting terror activities in Sydney
. Despite distancing the suspects from religion, Abbott did make a connection to the Middle East.
"There are now about a hundred Australians who are fighting with terrorists in the Middle East," and another 150 people in Australia support them with funds and recruiting, the Prime Minister said.
In February, Abbott announced tougher citizenship laws as a part of the government's new counterterrorism strategy. Authorities have suspended Australian passports of those they suspect of terrorist activity.
Australians should be stoic about the threat of terrorism, Abbott said Saturday. "The best thing you can do in the face of those who would do us harm is live your life normally."
He asked Australians to turn out in droves on Anzac Day. Police said this particular threat had been fully contained.